Whether order without discussing arguments put by appellant valid in law?

PJ/CASE LAW/2016-17/3111

Case:- COMMR. OF C. EX., LUDHIANA VERSUS PERFECT DYEING & FINISHING INDUSTRIES

Citation: - 2016 (332) E.L.T.249 (P & H)

Brief facts: - This appeal has been preferred by the revenue under Section 35G of the Central Excise Act, 1944 (in short “the Act”) against the order dated 13-3-2014 (Annexure A-4) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as “the Tribunal”) claiming the following substantial questions of law :-

(i) Whether the Hon’ble Tribunal is justified in rejecting the appeal of the Department without discussing the arguments put forth in the grounds of appeal duly supported by relevant citations of Hon’ble Supreme Court of India & Tribunal?

(ii) Whether the department is expected to prove the case of clandestine removal with mathematical precision even after gather enough primary evidence like the statements of 15 parties (out of 31 parties) whose name figured in the private diary resumed from the party evidencing unaccounted transactions of dyed fabrics indicating clandestine removal and voluntary admission by the party in written statement to this effect?

The facts, in short, necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee is engaged in the business of dyeing of cotton, PC, polyster knitted fabrics. On a specific intelligence that the assessee was indulging in clandestine removal of polyster knitted fabrics without payment of duty and without any statutory records, the preventive staff officers visited the factory premises of the appellant on 8-6-2000. During the course of search, an excess stock of 2270 kgs dyed polyster fabrics was found which was seized and a show cause notice was issued. The visiting staff also recovered some loose challans and a diary evidencing unaccounted transactions of dyed fabrics. Shri Varinder Kumar, partner of the appellant in his statement dated 8-6-2000 admitted that the said diary was being maintained by them and explained the entries thereof. He further admitted that the goods mentioned in the said diary were not accounted for in their records to escape duty liability and were cleared clandestinely without payment of duty. He further stated that the said diary was being maintained by Shri Harbans Lal, Dyeing Master on his instructions and the loose challans were retained by them upto the date of settlement of accounts and thereafter the same were destroyed. The parties (15 in number) whose addresses were disclosed by Shri Varinder Kumar, during investigation also confessed to having got dyed their fabrics with the appellant. A show cause notice dated 27-4-2005 (Annexure A-1) was issued to the appellant for recovery of ` 23,26,594/- as excise duty along with interest and penalty. The Adjudicating Authority vide order dated 11-12-2006 (Annexure A-2) confirmed the demand along with interest and also imposed penalty of equal amount on the appellant. However, no penalty was imposed on 15 parties on the ground that there was no allegation that they had acted in collusion with the appellant. Feeling aggrieved, the assessee filed an appeal before the Commissioner (Appeals) who vide order dated 22-10-2007 (Annexure A-3) allowed the appeal and set aside the order of the adjudicating authority. Being aggrieved by the order, Annexure A-3, the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 13-3-2014 (Annexure A-4) rejected the appeal of the revenue. Hence, the present appeal.

Appellant’s Contention: - Learned counsel for the revenue submitted that the Tribunal has wrongly rejected the appeal of the revenue without considering the arguments raised by the department and relevant provisions of law. It was further submitted that the Tribunal has wrongly observed that there was no evidence regarding the clandestine removal of the goods.

Respondent’s Contention:-On the other hand, learned counsel for the assessee supported the order passed by the Tribunal and prayed for dismissal of the appeal.

Reasoning Of Judgement: - A show cause notice dated 27-4-2005 (Annexure A-1) was issued to the assessee for recovery of ` 23,26,594/- along with interest and penalty for clandestinely removing dyed fabric. The adjudicating authority vide order dated 11-12-2006 (Annexure A-2) confirmed the said demand along with interest and also imposed penalty of equal amount, i.e., ` 23,26,594/-. However, finding that there was no collusion between 15 parties and the appellant, no penalty was imposed on them. On appeal by the assessee, the order, Annexure A-2, was set aside by the Commissioner (Appeals) vide order dated 22-10-2007 (Annexure A-3) against which the Revenue filed an appeal before the Tribunal. The Tribunal vide order dated 13-3-2014 (Annexure A-4) rejected the appeal of the Revenue. The Tribunal had noticed in para 5 of the order that on going through the order of the Commissioner (Appeals), I find that their dyeing master Shri Harbans Lal during the course of adjudication had accepted that the entries made in the diary belonged to him and were relating to his business transactions. The Tribunal further observed that the Commissioner (Appeals) also took into consideration the retraction made by the appellant by way of sending telegram and that the appellants have no capacity to manufacture such a huge quantity of poly fabrics. The Tribunal by merely observing that the learned Advocate for the assessee had placed on record the number of decisions laying down that entries made in the private note book read with statement cannot be held to be evidence to conclude against the assessee, rejected the appeal of the Revenue. The charges of clandestine activities are required to be adjudicated by appreciating the factual matrix and by giving sufficient and cogent reasons. A perusal of the order of the Tribunal more particularly para 7 thereof shows that no legally justified reasons have been recorded for rejecting the appeal of the Revenue. The Tribunal being a final fact finding authority was required to deal with all aspects of facts and also law and then record its conclusions based thereon.
In view of the above, the matter requires to be remanded. Accordingly, the appeal is allowed and the order dated 13-3-2014 (Annexure A-4) passed by the Tribunal is set aside. The matter is remitted to the Tribunal to decide the same afresh and for passing a well reasoned speaking order after affording an opportunity of hearing to the parties in accordance with law.

Decision: -Appeals allowed.

Comment: - The gist of the case is that order which is passed without discussing the arguments put forth in the grounds of appeal is not tenable in the eyes of law. The appellate authority ought to consider all the arguments put forth and is required to pass a detailed order discussing and assigning reasons for arriving at the final decision.

Prepared By: - Alakh Bhandari

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PJ/CASE LAW/2016-17/3111

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